WIREDGOV

Minister welcomes NAO report on the Financial Services Authority (FSA)

HM TREASURY News Release (50/07) issued by The Government News Network on 30 April 2007

Ed Balls, Economic Secretary, today published the Treasury-commissioned National Audit Office (NAO) report on economy, efficiency and effectiveness of the FSA. The report was presented to the City High-Level Group by Sir John Bourn, Head of the NAO, at a meeting hosted by Ed Balls, Economic Secretary.

Maintaining cutting edge principles-based regulation is a key objective for enhancing City of London competitiveness. Research points to the importance of regulatory frameworks for financial sector competitiveness.

Ed Balls, Economic Secretary said:

"I welcome today's NAO report. I think it is a useful and thorough assessment of the FSA's performance. The independent NAO report shows that the FSA is working well, and is a world leader in a number of areas - which can only be good for the competitiveness of the UK financial services sector.

"The report demonstrates that the FSA has clearly established itself as the unified UK financial regulator based upon the principle of proportionate risk-based regulation.

"I welcome the constructive response that the FSA has issued to the recommendations setting out how it intends to take them forward. I look forward to discussing progress at my regular meetings with Callum McCarthy and John Tiner."

The report points out that the FSA is highly regarded internationally. It has established strong relationships with its stakeholders and other UK regulators and enforcement agencies, who regard the FSA's performance favourably in light of the areas examined in the report. It also sets out a number of recommendations aimed at helping the FSA improve its effectiveness.

The NAO was asked to examine five main areas that were arrived at in consultation with key FSA stakeholders. These were:

* An audit of the FSA's emerging performance management framework; and

* An assessment of the FSA's use of resources in relation to its objectives and activities covering: financial crime; financial capability; joint-working with other domestic regulators; and international influence and representation.

NOTES TO EDITORS

1. On 21 June 2006, the Economic Secretary announced that the National Audit Office had been invited to carry out a review into the economy, efficiency and effectiveness with which the Financial Services Authority has used its resources when discharging its statutory functions.

2. Section 12 of the Financial Services and Markets Act 2000 gives the Treasury powers to commission an independent review of this kind.

3. The Report is available on the NAO website at http://www.nao.org.uk/publications/nao_reports/06-07/0607500.pdf

4. The NAO press notice is available on the NAO website at http://www.nao.org.uk/pn/current.asp

5. The Chancellor announced in Budget 2006 a commitment to work with the financial sector to establish High-Level Group, with senior representatives from across the financial sector, to develop and support a new strategy to promote London as the leading international financial centre.

6. The High-Level Group held its first meeting at 11 Downing Street on 18 October 2006. The Group was chaired by the Chancellor of the Exchequer, Gordon Brown, with Ed Balls, Economic Secretary to the Treasury and Minister for Trade, Ian McCartney, also attending.

7. The Economic Secretary announced on 29 November 2006 (PN 102/06) that he would chair a seminar with the High-Level Group on principles-based regulation, with a presentation from John Tiner, Chief Executive of the FSA. The Chancellor will chair a follow-up meeting of the High-level Group on 9 May.

8. Today's meeting to discuss principles-based regulation was hosted by Citigroup Chief Executive Bill Mills at the Citigroup offices. Other attendees included:

Lord Aldington - Deutsche Bank

Lord Currie of Marylebone - Sir John Cass Business School

Sandy Crombie - Standard Life

Tim Hancock - NM Rothschild & Sons

Jonathan Chenevix-Trench - Morgan Stanley International

Mark Garvin - JP Morgan Chase International

Ian Sayers - Standard Chartered

Simon Davies - Threadneedle Investments

Michael Geoghegan CBE - HSBC

Chris Gibson-Smith - London Stock Exchange

Steve Ilott - Aberdeen Asset Management

Richard Gnodde - Goldman Sachs International

Sir Fred Goodwin - Royal Bank of Scotland

Jeremy Palmer - UBS Investment Bank

Roy Leighton - NYMEX Europe Limited

Lord Levene of Portsoken - Lloyds TSB

Jeremy Skinner - Greater London Authority

Harvey McGrath - Man Group

Richard Harvey - Aviva

Andrew Moss - Aviva

Stuart Popham - Clifford Chance

Sir Michael Rake - KPMG

Teresa Sayers - Financial Services Skills Council

Michael Snyder - City of London Corporation

Philip Broadley - Prudential

Gary Hoffman - Barclays

Andre Villeneuve - Euronext.liffe

Bob Wigley - Merrill Lynch International

Alan Yarrow - Dresdner Kleinwort Wasserstein

Philip Yea - 3i Investments

John Tiner - Financial Services Authority

Sir John Gieve - Bank of England

Dominic Jermey - UK Trade and Investment

9. Callum McCarthy is Chairman of the FSA.

10. Non-media enquiries should be addressed to the Treasury's Correspondence and Enquiry Unit on 020 7270 4558, or by e-mail to public.enquiries@hm-treasury.gov.uk.

11. This press release and other Treasury publications and information are available on the Treasury website at http://www.hm-treasury.gov.uk. If you would like Treasury press releases to be sent to you automatically by e-mail you can subscribe to this service from the press release site on the website.